Stock and Amateur is the way to a “living” . . . but for whom?

There was a great article on the front page (!) of Variety this week (it’s rare that a theater story gets the cover) about the life after Broadway for musicals that may not have been so well received by The White Way. (To be honest, the article seemed like a byline from a Dreamworks exec, because the article began by stating how DWorks was set to recover a chunk of their $26 million capitalization through national tours and high schools, therefore not making the past year and a half a total loss.)

The article went on to give specific examples of how a bunch of theatrical writers have earned a great deal of cash from shows that, for lack of a better word, flopped on Broadway. Some of the shows mentioned were All Shook Up, Footloose, Seussical, and The Wedding Singer.

Apparently, the success of the post-Broadway life of these shows has afforded the very talented writers of these musicals to keep on keeping on as theatrical writers. Let’s all be thankful this Thanksgiving week for that! Good writers writing is better for all of us.

But there is one thing about the article that bugged me a bit.

In the third paragraph, the author writes . . .

Community theaters and high school productions don’t produce the instant big bucks of Broadway and tours, but the royalties paid to creatives, producers and investors are pure profit . . .

Uhhh, hold up.

Profit to Producers? I’m not so sure about that.

Let’s break down how this works a little more specifically.

Producer finds show. Producer produces show. Show fails on Broadway for what could be one or several of a billion reasons: bad show, bad producing, bad timing, bad whatever. Whatever the reason, investors lose millions.

There is much sadness.

(Now here’s where the Variety article comes in.)

Stock and amateur rights are sold to a company like Samuel French or MTI.

In most cases, the Authors receive 60% of all monies. The show receives the other 40%. (Sometimes this can be 70/30 or 50/50, depending on the number of years this agreement is in place. At some point, however, the Authors will receive 100%).

So where does that 40% go? Well, if the show has not recouped, then it goes straight to the investors in an effort to get them paid back.

In the case of most flops, as evidenced by the article’s description of the current financial situation of Footloose (hasn’t recouped despite healthy licensing), the shows still never recoup.

Since Producers only really make money when the shows recoup, this means that despite taking the risk in the first place, despite mounting the production that got the Stock and Amateur companies interested in the first place, the Producers get zip.

Doesn’t that seem a bit counter-intuitive?

And what if I added to this fact that it has become more traditional lately that Directors (on original musicals, mostly) get a piece of the S&A for their contribution to the long term viability of the show?

So here’s my question . . .

It truly is fantastic that the S&A money can keep our writers writing by helping to pay their rent or buy a 2nd home. I want these guys working on shows so I can produce them.

But if the Producers aren’t getting anything to help pay their rent after a show flops, what is keeping them Producing?

Is this one of the main reasons why there are more career writers than career Producers?

Here’s my proposal:

Producers should get a small negotiated percentage (the exact number to be determined based on who originated the project, how much was completed before the Producer came on board) of all monies received by the Authors from stock and amateur . . . until recoupment.

I don’t want it forever. If a show recoups, I’m good. Keep it. We’re all gonna be ok.

But if it doesn’t, Producers deserve a small piece to help keep them in the game. Just like we are all better off with writers writing, we’re all better off with Producers producing.

Otherwise, Producers who produce shows that cost them money, time and investors (ever tried to raise money from a group of people after a show flops?), aren’t going to be too happy reading articles like this one.

If you were a Producer on one of the shows mentioned, how would you feel?

Related

Jay

Your premise seems to be that Broadway is essentially advertising for licensing, but schools and community theatres do many many musicals and plays that never had runs on Broadway. I’m not sure a Bway run is the #1 reason they choose certain works.
Plus, what if the reason the show bombed on Bway is the producer’s fault? Why should they get the creatives’ money for messing it up? If the show is doing well produced by schools and local theatres, that demonstrates that the show is solidly built and creatives should get paid for that construction.
I know you are only asking for a “small piece” but I think you’re biting it out of the wrong part of the pie. Maybe it would help if you could explain how exactly producers get paid on Broadway because it often seems to be a mystery. If they put their own money into the project, then aren’t they investors as well and don’t they get a part of that 40% already? If not, then aren’t they taking a salary along the way? Do they get paid every week the show is running? Can we see a breakdown of how this works?
I wouldn’t mind sharing royalties with individual producers who need to pay rent, but with corporate producers (Disney et al) you run the risk of creating an environment like record labels and film companies, where the creatives only get money after recoupment and the corporations make sure to charge so much for everything that projects almost never recoup. You would have to pay creatives much much larger advances.
Happy Thanksgiving!

Rich McMahon

Ken,
Nice analysis of this Variety article. One small point: in your Sept. interview/podcast with American Theater Wing you speak about a novel theater business model (which you have personally used) that melds the classically disparate functions of Producer and creative/writer(s), i.e., the Producer now participates significantly in the Play’s authorship and creative design. Per this model, would not the Producer also be entitled to a share of the mainstay 60% royalty?

Brad R

Ken,
Great points on that article.
Per Jay’s comments…Point taken on why should producers take author royalties if it was their fault the show bombed. But, what if the producer took a big risk on a bad show to begin with, perhaps thought they could make it better, and it bombs from writers’ or other creatives’ fault.
Should they still take such a big cut and the producers get nothing?

Ed

MA

Interesting question, Brad R, but I have trouble imagining why a producer would take “a big risk on a bad show.” There are thousands of talented playwrights who struggle to get produced, and even more wonderful plays/musicals that go largely ignored. If someone produces a bad show, knowing it’s a bad show, that person deserves to lose his money. Period.
And I’m with Jay: Can you please, Ken, explain how exactly producers get paid? Thanks.

Brad R

True, but I think my point was who’s to say it was bad producing at fault, maybe it was bad writing, maybe it was bad directing. Who’s the one who decides that?
How many producers have taken a show simply because the writer has a name? Can we say 100% that every show Stephen Sondheim has written is a great show? Or Andrew Lloyd Webber? Think about how many of their shows have gotten produced.

Stephen Buckle

The funding of Commercial Broadway and West End shows is incredibly risky and involves exceptionally large amounts of personal money so I agree that, no matter what the success of the initial mass-market production, that a small onward royalty (or simple per performance fee) should be paid to the original producer to help recoupment. There is no doubt a major presentation substantially raises the value of the written works and writer’s overall reputation – even when the show is a disaster. We all know that no matter how good the works, presentation and reviews that most shows struggle to recoup. I have talked in these terms to the owner/director of a fringe venue that pioneers new works; essentially his theatre is being used as a development house and to be sure the big boys come sniffing (scouting) when word gets out of a potential hit. With so many cuts of the pie it’s not an easy one but more recoupment (few expect profit!) means more investors in an industry that takes investors’ losses all too lightly.

Why not have the lead producer get a personal share of the subsidiary rights income already coming to the production- not unlike a producer’s royalty when the show is running. Personally I would like to see the production/producer’s share significantly reduced so that authors can earn a living from their works. The expectation should be that producers license production rights and make money on their production and maybe a movie version or even professional productions that replicate their original production but not stock and amateur and not for 20-30-40 years. After all it is only the playwright that stares down that blank page and creates something original. Where would we be without the playwrights? According to Todd London’s book OUTRAGEROUS FORTUNE the average playwright makes less than $40,000 per year and only one fourth of that from playwriting having to take other jobs to support themselves and their families. If they cannot make a living they will go to TV or advertising or give up. We owe it to our beloved theatre to cherish the gifts the playwrights bring and honor their profession. Check out Ken’s Podcast Episode #67 where we discuss this issue.